Without dwelling too much on the causes, some solutions may be sketched out. They will range from actions that must be taken now (where the choices are highly constrained), to those that allow more play for creativity. Unless we are willing to live like in Afghanistan or in Jaffna during the war, we have little alternative but to take on more debt to get the economy to fire on all cylinders.
I’ve been asked to comment on a brewing storm in a tea cup, the supposed opening of the gates to hordes of Indian IT workers. At this time, all that the government is considering is a Framework Agreement, or an agreement to work in a time-bound manner toward a technical and economic cooperation agreement. I was involved in the early stages of negotiation but have little knowledge of current state. Not having the time to engage with the issues in detail, I thought, I’d paste below the transcript of a talk I gave at the National Chamber of Commerce, along with the slideset. Addressing an audience of who I took to be diehard protectionist types from the world of commodities and goods, I had highlighted how much we had benefited from unilateral but incomplete (one still had to grovel before the BoI for most permissions) liberalization that allowed us to grow the telecom and IT & ITES sectors over the past two decades.
Services trade, especially mode 1 services trade where the buyer remains in the buyer’s country and the seller remains in the seller’s country, is critical to the development of emerging economies. India has been one of the greatest beneficiaries of liberalized trade, but the NYT article below shows that the US is also a clear winner. The full article is worth a read. For example, will Washington offer tax breaks or other export incentives? While businesses may clamor for them, these would be a setback for freer trade — after all, for years it has been America that has been hectoring other countries to end their subsidies to exporters.